Most emerging Asian currencies edged higher on Tuesday after Australia's central bank held rates to align with an improving global economy, but trading was subdued as investors remained extremely cautious before US elections.
The Taiwan dollar led gains on exporters' demand for settlements, while the South Korean won and the Malaysian ringgit turned slightly firmer, tracking a rise in the Australian dollar.
The Reserve Bank of Australia (RBA) skipped a chance to ease and kept rates at 3.25 percent citing higher inflation at home and a better global background, although it left the door open for stimulus if needed.
Investors hesitated to take more aggressive bullish positions in emerging Asian currencies amid uncertainty over the outcome of the tight US presidential election.
"The RBA did not cut rates, indicating the global economy is not too bad. So investors sold back the dollar, but only temporarily until tonight," said a senior Malaysian bank dealer in Kuala Lumpur.
Emerging Asian currencies slid on Monday because of growing caution before US elections.
US President Barack Obama and Republican challenger Mitt Romney are essentially tied, but the Democrat has a slight edge in some of the pivotal states where the election will be decided, according to Reuters/Ipsos polling.
The Taiwan dollar gained slightly on exporters' deals, but trading was extremely subdued before the US elections.
Foreign financial institutions and local interbank speculators hesitated to take any bets, awaiting the results of the poll.
The ringgit edged higher as the RBA decision lifted the Australian dollar, but the Malaysian currency could not extend gains on dollar demand related to bond hedging. Local investors sold the currency. The Philippine peso turned higher, tracking its Asian peers.
The peso started local trade slightly weaker on worries about Greece, while currency investors shrugged off data showing the country's inflation hit a four-month low in October.
Philippine consumer prices rose 3.1 percent in October from a year earlier, the slowest pace since June, giving the central bank room to keep policy rates at record low in the near term.
A foreign bank dealer in Manila expected the Bangko Sentral ng Pilipinas (BSP) to slash rates before the end of this year and the prospective rate cut may slow down the peso's strength.But the local currency is expected to stay firm on foreign investment inflows, remittances from overseas workers and solid economic fundamentals, the dealer said. Still, investors were wary of the central bank's steps to curb further appreciation in the best-performing emerging Asian currency so far this year with a 6.4 percent gain to the dollar.
Comments
Comments are closed.